System and method for paying down debt using an equity loan revolving line of credit

• US 20050060257A1
• Filed: 07/15/2004
• Published: 03/17/2005
• Est. Priority Date: 07/30/2003
• Status: Active Grant

• Current Assignee: Ramsden
• Original Assignee: John D. Fry
• Inventors: Fry, John D.
• Granted Patent: US 7,254,556 B2
• Time in Patent Office: Days
• US Class Current: 705/38
• CPC Class Codes: G06Q 20/10 specially adapted for electronic funds transfer [EFT] systems; specially adapted for home banking systems
• CPC Class Codes: G06Q 40/00 Finance; Insurance; Tax strategies; Processing of corporate or income taxes
• CPC Class Codes: G06Q 40/02 Banking, e.g. interest calculation or account maintenance credit or loans G06Q40/03
• CPC Class Codes: G06Q 40/03 Credit; Loans; Processing thereof

Abstract

A loan system program comprises a loan account having a loan principal on a purchased item, and a secondary account used to pay the amortized interest on the loan principal. A user deposits, such as through automatic deposit, user payments directly into the loan account, thus paying down the loan principal. The user then uses the secondary account for personal expenses that would otherwise be met by the deposited user payments. At the end of the month or grace period, the user pays off the monthly interest on the loan account with the secondary account. The lender than raises the loan balance of the loan account to cover the secondary account balance. At least a portion of the next user deposit to the loan account covers the raise loan balance, and another portion is used to pay down the loan principal.

Claims

1. In a mortgage system in which a loan account is secured to a property, the loan account comprising principal and interest, a method of paying the loan principal, such that equity in the property is increased, the method comprising the acts of:

receiving a first user payment into a loan account;

applying at least a first portion of the first user payment to the loan principal;

receiving a payment for at least amortized monthly interest on the loan account from a credit account, wherein the credit account comprises a credit limit and a grace period;

incurring a further debt on the loan account to pay off the balance of the credit account, the further debt causing the amount owed on the loan account to increase;

receiving a second user payment into the loan account;

applying at least a first portion of the second user payment to the further debt incurred on the loan; and

applying a second different portion of the second user payment to the loan principal.

2. The method as recited in claim 1, wherein any of the first and second users payment is an employment compensation, a social security payment, a trust fund payment, an individual retirement account payment, or a payment from a user savings account.

3. The method as recited in claim 2, further comprising applying at least a second portion of the first user payment into another account.

4. The method as recited in claim 2, wherein the entire first user payment is automatically deposited into the loan account, such that the loan principal is reduced by the amount of the automatically deposited first user payment.

5. The method as recited in claim 1, wherein the loan account is a revolving loan account, and wherein the credit account is a conventional credit card account.

6. The method as recited in claim 5, wherein the loan account comprises a fixed year arm, a fixed year balloon payment, a fixed-interest rate loan, or a variable-interest rate loan.

7. The method as recited in claim 1, wherein the lender of the loan account is different from a provider of the credit account.

8. The method as recited in claim 1, further comprising an act of using the credit account to pay a credit account service fee, such that a provider of the credit account receives the credit card service fee as a payment.

9. The method as recited in claim 1, further comprising an act of charging a loan service fee to the loan account, wherein a lender of the loan account receives the loan service fee as a payment.

10. The method as recited in claim 1, wherein the at least amortized monthly interest is not compounded with the loan principal.

11. The method as recited in claim 10, wherein the at least amortized monthly interest comprises interest that is amortized at a rate that is less than monthly, a rate that is less than weekly, or that is amortized daily.

12. The method as recited in claim 1, wherein loan account is a home equity loan account.

13. In a mortgage system in which a loan account is secured to a property, the loan account comprising principal and interest, a method of managing a loan program for a user, such that equity in the property is increased, the method comprising the acts of:

providing a user with a revolving loan account, the loan account having a loan principal and a monthly loan interest;

providing a secondary account having an access limit based at least on a monthly user budget, and the monthly loan interest;

automatically paying the monthly loan interest with the secondary account; and

automatically paying down the loan principal and the secondary account at least in part with one or more user payments, such that the principal is paid down each time at least one of the one or more user'"'"'s payments are received.

14. The method as recited in claim 13, further comprising identifying a user income and budget, wherein the lender identifies the access limit based at least in part on the identified user income and the user budget.

15. The method as recited in claim 13, wherein the secondary account comprises one of a credit account, a checking account, an access limit on the loan account, or a third party provided account.

16. The method as recited in claim 13, further comprising amortizing the loan interest on the loan principal on a daily basis.

17. The method as recited in claim 13, wherein the one or more user payments are an employment compensation, a social security payment, a trust fund payment, an individual retirement account payment, or a payment from a user savings account.

18. The method as recited in claim 13, wherein at least a first portion of the at least one of the one or more user payments is automatically deposited into the loan account, and wherein at least a second portion of the at least one of the one or more user payments is deposited into another account.

19. The method as recited in claim 13, wherein the entire one or more user payments are automatically deposited into the loan account, such that the loan principal is reduced by the amount of the automatically deposited one or more user payments.

20. The method as recited in claim 13, wherein the loan account is a revolving loan account, and wherein the secondary account is one of a conventional credit card account, a checking account with an overdraft limit, a money market account, and an access limit attached to the loan account.

21. The method as recited in claim 20, wherein the loan account comprises a fixed year arm, a fixed year balloon payment, a fixed-interest rate loan, or a variable-interest rate loan.

22. The method as recited in claim 13, further comprising an act of automatically deducting a loan service fee from the loan account, wherein a lender of the loan account receives the loan service fee as a payment.

23. The method as recited in claim 13, further comprising an act of automatically deducting an account service fee from the secondary account, wherein a provider of the secondary account receives the account service fee as a payment.

24. A computer program product for use in a mortgage system in which a loan account is secured to a property, the loan account comprising principal and interest, the computer program product implementing a method of paying the loan principal, such that equity in the property is increased, the computer program product method comprising one or more computer-readable media having computer-executable instructions stored thereon that, when executed at a processor, cause the mortgage system to perform the following:

receive a first user payment into a loan account,

apply at least a first portion of the first user payment to the loan principal;

receive a payment for at least amortized monthly interest on the loan account from a credit account, wherein the credit account comprises a credit limit and a grace period;

incur a further debt on the loan account to pay off the balance of the credit account, the further debt causing the amount owed on the loan account to increase;

receive a second user payment into the loan account;

apply at least a first portion of the second user payment to the further debt incurred on the loan; and

apply a second different portion of the second user payment to the loan principal.

25. The method as recited in claim 24, wherein the loan account is a revolving loan account, and wherein the credit account is a conventional credit card account.

26. The method as recited in claim 24, wherein the loan account comprises a fixed year arm, a fixed year balloon payment, a fixed-interest rate loan, or a variable-interest rate loan.